[When we learned that SCOTUS had granted cert. in this case, since David Horton (pictured) has guest blogged for us before, repeatedly, we threatened to hold him hostage until we could complete our science fiction fanstasy movie called Argo unless he could supply a post on the case. Beacuse of the following post, it looks like the film will never be made. Can someone get John Goodman and Alan Arkin out of our blog offices?]

Jeremy has kindly asked me to say a few words about the U.S.
Supreme Court’s cert grant in American
Express Co. v. Italian Colors Restaurant, No. 12-133, 2012 WL 3096737 (U.S.
Nov. 9, 2012) (“Amex”). For years, scholars like Jean Sternlight
and Myriam
E. Gilles have warned that the Court’s expansive interpretation of the
Federal Arbitration Act (“FAA”) will kill off the consumer and employment class
action. Amex may drive the final nail into this coffin. In fact, as I’ll explain, the case has the
potential to sweep even further.

As many
readers of this blog know, Amex comes
hot on the heels of AT&T Mobility LLC
v. Concepcion, 131 S. Ct. 1740 (2011).
Before Concepcion, courts
routinely held that class arbitration waivers were unconscionable when applied
to numerous, low value, state law claims.
The idea was that these small-dollar grievances—which usually invoked
state consumer protection statutes—would either be pursued as a class action or
not at all. However, Concepcion (arguably) held that section
2 of the FAA preempts this line of authority.
(I say “arguably” because Concepcion’s
precise holding remains contested, and to plug my
forthcoming article, which urges courts to read Concepcion narrowly). Justice
Scalia’s majority opinion reasoned that using the unconscionability doctrine to
mandate class arbitration—which is slower and more formal than two-party
arbitration—violated the FAA’s purposes and objectives. Justice Scalia then dismissed concerns about
deterring small claims by declaring that “[s]tates cannot require a procedure
that is inconsistent with the FAA, even if it is desirable for unrelated
reasons.”

Amex falls into this gap. The plaintiffs, a group of merchants and a
trade association, claim that American Express violated the Sherman and Clayton
Acts. Although the parties’ agreements
contain a class arbitration waiver, the plaintiffs claim that the expense of proving
their allegations (between several hundred thousand and a million dollars)
dwarfs any individual’s potential recovery (a maximum of $38,000, even if
trebled under the antitrust statutes).
Thus, the Court (minus Justice Sotomayor, who sat on a Second Circuit
panel that considered an earlier iteration of the case) will decide whether Concepcion’s rhetoric about the evils of
class arbitration extends to negative-value federal statutory claims.

From
reading the petition for certiorari—which was supported by amicus briefs from
the usual defense-side suspects—it seems that the vindication of rights
doctrine itself will come under fire.
Of course, it’s unlikely to be the flagship argument. I think American Express et al. will first
try to stretch Concepcion as far as
possible and then distinguish the plaintiff’s costs (which are mostly expert
fees) from other vindication of rights holdings (which tend to involve expenses
that wouldn’t normally be incurred in litigation, such as arbitrator’s fees). But at least some of the briefs are already
challenging Green Tree as dicta.
If the Court takes the bait and throttles back on the vindication of
rights doctrine, it would affect the entire sprawling institution of
arbitration—not just class actions. Even
plaintiffs with righteous, non-class claims under important federal statutes
wouldn’t be able to challenge egregious arbitration clauses under federal
law. (To be sure, the unconscionability
defense might still prune away the worst provisions, but it (1) is notoriously
unreliable and (2) also hangs by a thread in the arbitration arena). Thus, Amex
could be another large step toward a proposition that the Court seems
increasingly willing to embrace: claims must be sent to arbitration even if
they can’t or won’t be arbitrated.